WALMART SLUGGISH SALES CAUSE ECONOMIC FEARS
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Fears over recovery as Wal-Mart sales stall
Worries about the sustainability of the US economic recovery were stoked on
Sunday after Wal-Mart, the discount retailer that is a bellwether for the
country's retail sector, announced that sales grew by only 0.7 per cent in the
year to November.
The world's largest retailer had estimated growth of 2 to 4 per cent just 10
days ago. But Wal-Mart revised its estimates down on Saturday evening after
disappointing sales on “Black Friday”, the day after Thanksgiving so called
because it is traditionally the time retailers move into profit for the year. It
is an indicator of spending for the holiday season, when a quarter of annual
retail sales are rung up.
Wal-Mart said sales had fallen “below plan” in the last week of November and
sales growth was down on the 2.8 per cent annual rate it had reported for
October.
The weakness suffered by Wal-Mart, if repeated elsewhere, would add to concerns
about the durability of the US economic upturn. Widespread reluctance by
consumers to maintain their free and easy spending habits would slow the economy
sharply.
In recent years, and in the recession of 2001, US consumers defied predictions
that their appetite for new goods would diminish. A slowdown of consumer
spending would add to recent international dollar-related concerns about the
prospects for exports to the US.
Although Wal-Mart reported strong sales of digital cameras, television/DVD sets,
learning toys and video games, it said “customer traffic declined towards the
end of the week”.
Bill Beemer, head of America's Research Group, which surveyed 1,000 shoppers
every night over the long weekend, said one reason for the slow sales at
Wal-Mart could be that it had not discounted as heavily as other retailers.
“This year they did not get nearly as aggressive on the early-bird specials, and
it cost them,” he said, adding that rivals such as JC Penney, Best Buy, Sears
and Circuit City had discounted more deeply. But Mr Beemer's survey found that
shopping levels overall on Friday were flat or down as much as 5 per cent.
However, other snapshot surveys painted a more optimistic picture. Shoppertrak
showed sales on Friday grew 10.8 per cent from a year ago to $8bn. Visa USA said
spending on its cards had risen 15.5 per cent to $4.1bn, although experts warned
that this number may be more a reflection of the increased use of its credit
cards.
Wal-Mart's lacklustre sales were partly ascribed to higher energy prices, in
particular that of heating gas, which had cut customers' disposable income.
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